US could give China flexibility on pledges over imports

WASHINGTON • The United States is willing to show China some flexibility on its pledges to boost American imports as long as Beijing ensures exports do not surge when production returns to full strength and widen the trade imbalance between the world's two largest economies, people familiar with the discussions said.

Given Beijing's focus on containing the coronavirus outbreak and the country's lagging demand for American imports, US officials have told their Chinese counterparts that the purchasing boost, signed in January with specific target dates and commodities, could start off slowly, according to people in Washington and Beijing with knowledge of the discussions.

But that understanding comes with some conditions, according to them. The Trump administration has made clear that this is an option only as long as there is no jump in Chinese exports when virus-related industrial shutdowns end.

A sharp rebound in shipments of Chinese products without a corresponding upswing in imports would swell the already gaping US trade deficit with China - the metric that President Donald Trump has frequently based his success on.

One of the people said another condition is that the total of the purchase targets cannot change and that China will have to eventually fulfil the commitments.

A spokesman for the US Trade Representative said, however, the agency had not had such a conversation with its Chinese counterparts, adding that the US expects China to meet its commitments under the agreement.

The US-China trade balance is Mr Trump's go-to gauge to see who is winning the global battle for economic supremacy. So there would likely be little patience in the US administration - particularly leading up to Mr Trump's re-election bid in November - to let China delay purchases while exports accelerate.

The people with knowledge of the matter did not say how China would ensure that there is no surge in exports.

For the first two months of this year, China had a trade surplus of US$25.4 billion (S$35.1 billion) with the US. The US trade deficit with China narrowed in January to US$23.7 billion, the smallest since 2011, according to US data released last week.

The phase one trade deal that led to a tariff ceasefire took effect in the middle of last month. Since then, China has been making progress in fulfilling some of the requirements, lowering tariffs, reducing restrictions on US agricultural products and approving Mastercard to set up a bank card clearing business.

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